BUENOS AIRES — For ordinary Argentines, it has been a shocking return to the bad old days, a deja vu of shortages, job losses and bailouts that many thought the country had finally ended.
Facing a national election a year away, the ever-upbeat President Mauricio Macri never tires of reassuring Argentines that they are on “the right path” out of a “storm.”
But to local economists, even those friendly to the conservative Mr. Macri’s pro-business bent, his imagery doesn’t quite capture the state of an economy predicted to shrink by 2.4 percent this year and had to be propped up just last week by an expanded $57 billion line of credit from the International Monetary Fund. Having emerged from one of the world’s worst currency implosions of the new century, consumers are suddenly confronting a reprise.
Things aren’t nearly as dire as the post-2001 years, and a more apt metaphor, former National Bank board member Facundo Martinez Maino said, might be that of a car-wreck victim hospitalized after a head-on collision.
“Right now, staying alive is all that matters,” said Mr. Martinez Maino, now the chief economist at a prominent local consulting firm. “You’re in a totally sterile room, under controlled temperature, and you can’t venture out or eat [without] a feeding tube.”
It’s a grim picture reflected by key indicators — Argentina’s inflation rate is now topped around the world only by those of Venezuela, Sudan and South Sudan — and painful even for the urban middle class, a key component of Mr. Macri’s political base.
“The situation is critical, unfortunately,” Graciela Clouet, a 66-year-old lawyer, said last week as she shopped for groceries in an upscale Buenos Aires neighborhood. “You don’t know where we’re headed, and you worry.”
Prices are constantly being hiked, Ms. Clouet said, while the decline of the peso, which has already lost more than half its value this year, is having ripple effects on the rising cost of gasoline and consumer goods across the board.
But what bothers her the most, she said, is the sense of uncertainty, which Mr. Macri’s repeatedly unkept promises that “the worst is over” have done little to ease.
“I want there to be a direction … for us to go toward someplace,” Ms. Clouet said. “I feel like we’re improvising.”
For market movers and shakers, the chaotic state of the economy has long contrasted with the president’s near-dogmatic confidence and, worse, conjured up memories of those crises past — including Argentina’s cataclysmic 2001 default and social meltdown.
“We have gotten to a situation that, as a snapshot, is one of the worst since 2001 in terms of devaluation, inflation, recession and economic perspectives,” Mr. Martinez Maino said. “We’re in one of the worst situations since that collapse.”
He added, though, that the two scenarios are vastly different in causes and scope.
Fears of a rerun
Even the sense that the country may be headed down a similar road is precisely what Mr. Macri — and anybody else interested in stabilizing the economy — is desperately hoping to avoid, said Mariano de Vedia, a political analyst for the La Nacion daily.
“There’s an old saying here in Argentina: ‘He who burns himself with milk sees a cow and cries …,’” Mr. de Vedia said. “Already, salaries are worth less and less, layoffs are beginning to happen and the dollar heads to the skies.”
For Argentina’s lower and middle classes, meanwhile, keeping up with ever-increasing food, utility and transportation costs is becoming increasingly difficult, economic analyst Jose Luis Espert said.
“This year, with an inflation between 40 and 50 percent and salaries that rise between 25 and 30 percent, the real-wage drop is 15 percent,” Mr. Espert said. “Companies are closing, stores are closing, and there is a very, very violent drop in consumption.”
For Roberto Rodriguez, who co-owns a florist shop on a lively Buenos Aires street corner, that means business has been “totally paralyzed.”
“You notice it in the stores around,” he said. “[This is] a spot with pretty good purchasing power, and even so, we’re feeling it.”
Mr. Rodriguez said he still plans to back Mr. Macri if he runs for re-election next year, hinting that he favors the president’s “change” agenda over the often inflexible protectionism of his predecessor, leftist Cristina Fernandez.
Although Ms. Fernandez may have handed over a bloated government whose coffers had been emptied by populist spending and corruption, most commentators agree that, three years into his term, Mr. Macri shares a large chunk of the blame for the country’s predicament.
By hastily eliminating currency controls, insisting on unrealistic inflation goals and taking on debt in an undisciplined and unsavvy manner, Mr. Macri committed key errors from the get-go, Mr. Martinez Maino said.
“Today, we’re faced more with macroeconomic problems generated by this administration than with inherited problems, which we’re also faced with,” he said. “All three elements failed: diagnosis, policies and management.”
To Mr. Espert, the president’s latest attempt to turn things around with a dual commitment to a no-deficit budget and steady money supply thanks to the expanded IMF credit line likely comes a day late and a peso short.
“If ‘zero deficit’ and ‘zero issuance’ had been announced [in 2015], rejecting [Ms. Fernandez’s] inheritance, it would have been one thing,” he said. “Today, almost three years later … and a year before the elections, it lacks credibility.”
If Mr. Macri really wants to turn things around, Mr. Espert said, his focus will need to be less about political calculus a year before Argentines head to the polls.
“This administration should forget about the elections [and] take some risks today to get the economy moving by doing some bold things,” he said. “For example, go see [President] Trump and propose a free trade agreement.”
Ironically, the troubling economy may have boxed in the ruling Cambiemos coalition, even though Mr. Macri has yet to formally announce that he will be seeking a second term, Mr. de Vedia said.
“The situation is forcing them to ratify the president’s re-election [bid],” he said, “because, otherwise, it’s a recognition of his failure.”
If a showdown next year between Mr. Macri and Ms. Fernandez takes place in the midst of a recession, the political analysts mused, then the outcome would be unpredictable.
“People could easily say ‘no’ to the administration and also say ‘no’ to Cristina,” Mr. de Vedia said. “It’s not necessarily one or the other.”